Executives at Target told investors on the retailer’s quarterly earnings call that they’re changing how they approach merchandising in 2026.
In part, they’re leaning further into beauty-category sales as well as food and beverage.
“We’re leveraging technology to support our company’s digital growth and enhance the in-store experience,” CEO Michael Fiddelke said. “That balance has been skewed in recent years by explosive digital growth. But today, we’re using technology to keep momentum building in our digital business and simplify work for our store teams so they can spend more time serving our guests.”
Target is No. 5 in the Top 2000 Database. The database is Digital Commerce 360’s ranking of North America’s online retailers by web sales.
Target is also No. 64 in the Global Online Marketplaces Database, which ranks the 100 largest global marketplaces by third-party gross merchandise value (GMV).
Making Target easier to shop
Cara Sylvester, chief merchandising officer, told investors the retailer is “accelerating assortment” on its third-party online marketplace, Target Plus.
She also noted that the beauty category “has delivered more than a decade of growth” for Target. It’s now one of Target’s “most powerful and margin-driving categories,” she said.
At the same time, Target has left its baby category “untouched for years,” according to Sylvester. She said Target is expanding its Cloud Island brand and “creating a premium boutique-style baby experience.” That will include partnerships with brands like UPPAbaby, Bugaboo, Doona and Stokke.
Sylvester said Target is “resetting” the operating model at its stores. In part, that’s to make Target easy to shop, zoned, organized, in-stock, clean and fast.
Over the past year, she said, Target has also “transformed” its app experience, strengthened its personalization capabilities and continued scaling Roundel (its retail media network), Target Plus and Target Circle 360 (its paid membership tier).
“Together, these capabilities form our digital growth flywheel,” Sylvester said. “And they are driving consistent growth and deeper engagement across our ecosystem. Today, our AI-driven personalization engine powered by Target Circle generates billions of dollars in incremental sales, delivering targeted offers and rewards that increase engagement and lifetime value.”
How Target is reshaping its grocery merchandising approach
The food and beverage category is also one of Target’s most important, according to Sylvester. She said Target has built its business for how families shop today: “digital-first and fast.”
“We invested early in same-day services, and our digital grocery capabilities are deeply integrated in order pickup, Drive Up and same-day delivery,” Sylvester said.
She said Target is the fifth-largest digital grocer in America.
“We’ll continue to innovate in the digital experience and grow Target Circle 360 to drive further separation in digital grocery,” Sylvester said.
She said “newness” drove $2 billion in Target’s 2025 online grocery sales. Target plans to double the number of unique items in its assortment over the next three years, she said, as 40% of its customers tell the retailer they’re looking for something new when they shop for food at Target.
“When we deliver trend-right newness, consumers respond, as we saw last year in nonalcoholic beverages with significant newness propelling the category to a 6.5% comp,” Sylvester said. “And we’re not stopping there. In May, we will become one of the first national retailers with no certified synthetic colors in any of the cereal that we sell, a decisive step that reflects where families are heading and where Target intends to lead.”
Sylvester said Target will continue to grow its Good & Gather brand. Good & Gather is on pace to become Target’s first $4 billion owned brand, she added.
“Over nearly a decade, we’ve invested in supply chain, store expansion, remodels and digital integration to build scale and capacity,” Sylvester said. “Now we’re accelerating our differentiation because food drives trips, trips build loyalty and loyalty drives durable growth across our entire assortment.”
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